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What Drove Sprint’s Fiscal 2Q17 Earnings Growth?

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Sprint’s earnings trend

Sprint’s (S) solid fiscal 2Q17 results showed that its turnaround is on track and the company is indeed holding its own in an intensely competitive wireless environment. The telecom company has started to recover from years of subscriber losses and continues to make progress both on expense optimization initiatives and customer retention and acquisition.

In fiscal 2Q17, Sprint’s earnings grew significantly YoY (year-over-year). An EPS (earnings per share) loss of $0.01 in fiscal 2Q17 improved from a loss of $0.04 in fiscal 2Q16. Wall Street analysts had expected an EPS loss of $0.02 in fiscal 2Q17. Sprint reported strong financials, which were led in part by the company’s continued cost reduction initiatives. In fiscal 2Q17, Sprint realized ~$400 million in net cost reductions. The telecom company added 279,000 postpaid phone net customers and 95,000 prepaid customers in fiscal 2Q17.

According to a FierceWireless report on October 25, 2017, “The team was able to deliver this customer growth while continuing to attack the cost structure, improve the network, and maintain positive adjusted free cash flow.”

Peer comparison

In 3Q17, Verizon’s (VZ) adjusted EPS fell ~3.0% YoY to reach $0.98 excluding one-time items. Meanwhile, AT&T’s (T) adjusted EPS remained flat YoY to reach $0.74, whereas T-Mobile’s (TMUS) EPS rose ~50.0% YoY to reach $0.63 during the same quarter.

In the next part, we’ll look at Sprint’s revenue growth in fiscal 2Q17.

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